Reporting Segments

3 Months Ended

Mar. 31, 2020

(16) Reporting Segments

Prior to the closing of the Transactions, AMGP had no reporting segment results. Following the completion of the Transactions, the Company’s operations, which are located in the United States, are organized into two reporting segments: (i) gathering and processing and (ii) water handling.

Gathering and Processing

The gathering and processing segment includes a network of gathering pipelines and compressor stations that collect and process production from Antero Resources’ wells in West Virginia and Ohio. The gathering and processing segment also includes equity in earnings from the Company’s investments in the Joint Venture and Stonewall.

Water Handling

The Company’s water handling segment includes two independent systems that deliver fresh water from sources including the Ohio River, local reservoirs and several regional waterways. The water handling segment also includes the Clearwater Facility that was placed in service in 2018 and idled in September 2019 (See Note 4—Clearwater Facility Idling), as well as other fluid handling services, which includes high rate transfer, wastewater transportation, disposal and treatment. See Note 8—Property and Equipment.

These segments are monitored separately by management for performance and are consistent with internal financial reporting. These segments have been identified based on the differing products and services, regulatory environment and the expertise required for these operations. Management evaluates the performance of the Company’s business segments based on operating income. Interest expense is primarily managed and evaluated on a consolidated basis.

The summarized operating results and assets of the Company’s reportable segments were as follows for the three months ended March 31, 2019 and 2020:


	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Three months ended March 31, 2019
Revenues:
Revenue–Antero Resources	$	33,534		22,351		—		55,885
Revenue–third-party		—		4		—		4
Amortization of customer relationships		(501)		(1,280)		—		(1,781)
Total revenues		33,033		21,075		—		54,108

Operating expenses:
Direct operating		2,935		12,047		—		14,982
General and administrative (excluding equity-based compensation)		1,020		574		6,792		8,386
Equity-based compensation		377		213		10,833		11,423
Depreciation		2,560		5,090		—		7,650
Accretion and change in fair value of contingent acquisition consideration		—		1,049		—		1,049
Accretion of asset retirement obligations		—		10		—		10
Total operating expenses		6,892		18,983		17,625		43,500
Operating income	$	26,141		2,092		(17,625)		10,608

Equity in earnings of unconsolidated affiliates	$	2,880		—		—		2,880
Total assets	$	4,818,809		1,841,516		8,102		6,668,427
Additions to property and equipment	$	7,677		8,328		—		16,005

(1)	Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.


	Gathering and		Water				Consolidated
(in thousands)	Processing		Handling		Unallocated ⁽¹⁾		Total
Three months ended March 31, 2020
Revenues:
Revenue–Antero Resources	$	163,129		98,184		—		261,313
Amortization of customer relationships		(9,238)		(8,367)		—		(17,605)
Total revenues		153,891		89,817		—		243,708

Operating expenses:
Direct operating		13,391		35,337		—		48,728
General and administrative (excluding equity-based compensation)		5,044		2,905		2,250		10,199
Facility idling		—		8,678		—		8,678
Impairment of goodwill		575,461		—		—		575,461
Impairment of property and equipment		—		89,083		—		89,083
Equity-based compensation		2,533		555		250		3,338
Depreciation		13,050		14,293		—		27,343
Accretion of asset retirement obligations		—		42		—		42
Total operating expenses		609,479		150,893		2,500		762,872
Operating loss	$	(455,588)		(61,076)		(2,500)		(519,164)

Equity in earnings of unconsolidated affiliates	$	19,077		—		—		19,077
Total assets	$	4,347,932		1,184,095		249,332		5,781,359
Additions to property and equipment, net	$	54,659		13,324		—		67,983

(1)	Certain expenses that are not directly attributable to gathering and processing and water handling are managed and evaluated on a consolidated basis.